Andhra HC (Pre-Telangana)
Sri Kvr Forgings Limited vs Commissioner Of Central Excise on 17 July, 2001
JUDGMENT S.R. Nayak, J.
1. In this CERC, filed under Sec.35H of the Central Excise Act, 1944 (for short 'the Act'), the petitioner sought for a direction from this court to the appellate Tribunal to refer to this court the following questions:-
(i) Whether the Appellate Tribunal is correct in confirming the demand of Rs.94,035/- without giving any finding as to the appellant's claim for the duty exemption benefit under notification No.208/83 CE, dated 01-08.83?
(ii) Whether the Appellate Tribunal is correct in law in deciding the case as merely a case of short levy under Sec.11A of Central Excise, without giving any finding on the pivotal issue of classification, since it is connected with the claim of applicants on the availability of the exemption benefit under notification No.208/83 CE, dt. 01.08.83?
(iii) Whether the Appellate Tribunal was correct in law in not giving any finding on the classification of the goods manufactured by applicant when the very transfer of the case from the Southern Regional Bench of the Principal Bench was for the settlement of classification issue?
(iv) Whether the Appellate Tribunal was correct in law in not giving any finding on classification issue when the very cause of action for issuance of demand had nexus only with the classification of the impugned goods and although classification under Tariff Heading 72.08 was specifically claimed by the applicants in the adjudication proceedings?
(v) Whether the appellate Tribunal was correct in law in holding that the activity of manufacture of forgings by the applicants was not known to Department and came to its notice only on their officers visit on 25/26.06.87 and there was no reclassification of drop forgings by department?
2. The petitioners are the manufacturers of Drop Steel Forgings and according to them it falls under Ch.S.H.No.7208.00 of Central Excise Tariff Act, 1985, whereas according to the respondent-department the Drop Steel Forgings falls under Ch.S.H.No.7308.90. This point was specifically addressed before the Assistant Collector, Central Excise, Kakinada Division, Kakinada and the same was answered against the petitioner and in favour of the Department. However, on the ground that the reclassification is only prospective, the relief was granted to the petitioner.
3. Being aggrieved by the said order dated 5.4.1988 of the Asst. Collector, Central Excise, Kakinada, the department moved the appellate Commissioner, who confirmed the order of the Asst. Collector, vide his order dated 1-11-1989. The matter was further carried by the Department before the CEGAT. At this stage it is relevant to notice the statement of facts appended to the form of appeal before the CEGAT. It reads:-
" M/s. Sri K.V.R. Forgings (O) Ltd., Kakinada re the manufacture of steel forgings falling under T.H.No.7308.90 as residuary "articles of Iron or Steel" attracting 15% adv. of excise duty. But the party claimed that the said product was classifiable under T.H.No.7208 and they were eligible for exemption under Notification No.208/83 of dated 1-8-83 as amended. After due process of the case the Asst. Collector of C.E. Kakinada finally classified the above product under the erstwhile Central Excise Tariff Heading 7308.90 attracting C.E. Duty of 15% adv. However, the Asst. Collector dropped further proceedings initiated against the party in the show cause notice issued in the case taking the view that re-classification of steel drop forgings under 7308.90 should only have prospective and not retrospective effect in terms of the opinion of withdrawal in their order No.649 to 654/87D dated 21-8-87 (ELT/1030/87) in similar goods. The revenue had give in appeal to the Collector (appeals) orders against the order-in-original of the Asst. Collector of Central Excise, Kakinada Division, Kakinada and the Collector (appeals), Madras vide his order in appeal No.111/89(G)(D) A.No.42/89 (G)(D) dated 1-11-1989 hold the order-in-original of the Asst. Collector of Central Excise, Kakinada."
4. The CEGAT without adverting to the specific questions raised before it and the authorities below allowed the appeal of the Department placing reliance on the judgments in Tansi Furniture Works v. C.C.E.Madras1 on the ground that the case on hand is not a case of re-classification. The relevant portion of the order reads:
"When the matter was called, no one was present on behalf of the respondents. We find from the appeal papers that the respondents, under their letter dated 2-3-1998, made a request to decide the matter on merit. We, therefore, heard Shri Jagdish Singh, ld. D.R. and perused the records.
Ld. D.R. submitted that the respondents were manufacturing steel forgings, which were cleared by them without payment of duty and without following any Central Excise procedure and without filing the classification list; that when the officers visited the factory premises of the respondents on 25/26.6.87, they found the respondents manufacturing steel forgings. He, therefore, submitted that this is not a case where the duty is being demanded after revising the approved classification list as no classification list has at all been filed by the respondents. The respondents have relied upon the decision in the case of Tansi Furniture Works vs. C.C.E., Madras reported in 1997 (93) E.L.T.810, in which it was held that the demand has to be prospective in case of change of classification of goods.
Section 11A of the Central Excise Act provides for issuance of show cause notice for demanding the Central Excise duty if there is any non-levy or short levy. It is not the case of the respondents that they had filed any classification list claiming a particular classification and it was approved by the department. It is a case where the activity of manufacturing the forgings by the respondents came to the notice of the department only when the officers visited their factory premises and as such there is no change in the classification of the goods manufactured by the respondents. In the light of these facts, the decision, relied upon by the respondents, is not applicable to the facts of the present case. Accordingly, we allow the appeal, filed by the Revenue."
5. No doubt, as could be seen from the order of the CEGAT no one represented the petitioner herein before the CEGAT. Nevertheless, in our considered opinion, the CEGAT ought to have decided the question whether the goods in question fall under Ch.S.H.No.7208 or 7308.90. Such a decision was absolutely necessary in view of the specific plea taken by the petitioner herein and also as reflected in the statement of facts filed by the department itself along with appeal memorandum.
In that view of the matter, we direct the appellate tribunal to refer the following questions to this court after drawing up the statement of case:-
(i) Whether the Appellate Tribunal is correct in law in deciding the case as merely a case of short levy under Sec.11A of Central Excise, without giving any finding on the pivotal issue of classification, since it is connected with the claim of applicants on the availability of the exemption benefit under notification No.208/83 CE, dt. 01.08.83?
(ii) Whether the Appellate Tribunal was correct in law in not giving any finding on the classification of the goods manufactured by applicant when the very transfer of the case from the Southern Regional Bench of the Principal Bench was for the settlement of classification issue?
(iii) Whether the Appellate Tribunal was correct in law in not giving any finding on classification issue when the very cause of action for issuance of demand had nexus only with the classification of the impugned goods and although classification under Tariff Heading 72.08 was specifically claimed by the applicants in the adjudication proceedings?
6. The CERC is accordingly disposed of. No costs.